South Korea’s biotechnology company SillaJen Inc. dubbed a blue-chip share in the over-the-counter market, is likely to defer its initial public offering (IPO) slated for later this year in a bid to avoid the risk of its shares being undervalued as its bigger rival Samsung BioLogics, the biopharmaceutical business arm of Samsung Group, is also planning for IPO.

According to securities industry sources on Wednesday, SillaJen decided to apply for a preliminary initial IPO review in early October. The biotechnology venture previously planned to take the preliminary review steps in early September with a plan to go public on the secondary Korea Securities Dealers Automated Quotations (Kosdaq) market in December this year. But as its IPO schedule is delayed by over a month, the market debut won’t likely take place within this year.

Market observers say SillaJen has deferred its IPO schedule to avoid the danger of competing for demands with Samsung BioLogics that filed for preliminary IPO review on August 11 with a hope to go public on the main Korea Composite Stock Price Index (Kospi) market within this year.

If SillaJen pushes to go public within this year as it previously planned, both SillaJen and Samsung BioLogics will be out in the market at around the same time for public subscriptions. And the biotech firm’s share value may fall below its expectation as market’s demands disperse. A SillaJen official said that Samsung BioLogic’s application for preliminary IPO review did affect the firm’s decision to delay the IPO process. When two biotech firms go public at the same time, the IPO prices of the both firms will suffer, said the official.

The slowdown in pharmaceutical and biotech shares also placed an impact on SillaJen’s decision to postpone its IPO schedule. Kospi’s medical and pharmaceutical related shares in average dropped 4.45 percent in value over the past two months due to the burden of being overvalued. The demand and supply condition in the securities market itself is unfavorable for SillaJen now.

Established in 2006, SillaJen has developed anticancer treatment using anticancer viruses that selectively destroys cancer cells. Its liver cancer treatment obtained approval in the local phase 3 trial in May this year and it is speeding up with the process of the global phase 3 clinical trial. The market of treatments based on anticancer viruses is estimated at 1 trillion won ($894 million).

The total market capitalization of the SillaJen shares traded at the over-the-counter market is estimated at over 1 trillion won now, and the value is expected to jump to up to 5 trillion won once the firm goes public, market experts project.

By Yoo Tae-yang

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]